Parliament’s Public Accounts Committee has published a “withering” report into the Bounce Back Loan Scheme (BBLS), amid calls from AAT to write off small business loans.
The latest report found that the government was “not sufficiently prepared” to support micro businesses despite the economic impact of the pandemic being a “known risk”.
It added that BBLS do “not strike the right balance between supporting business and protecting the taxpayer”, while shortcomings in its design have “exposed the taxpayer to potentially significant losses”.
In addition, the committee called the government’s plans for managing risks to the taxpayer “woefully under-developed”.
Meg Hillier MP, chair of the Public Accounts Committee, said: “We all hope the Bounce Back Loan Scheme saves a significant number of Britain’s small businesses, who will play a key part in the economic recovery from this pandemic.
“But despite knowing that it was a case of ‘when’ rather than ‘if’ a serious pandemic hit the country, Government didn’t develop plans for how to support the economy. Rushing to get money out of the door after the fact didn’t allow for analysis of how many businesses needed this help, could benefit from it, or could repay it.”
AAT is now calling for loans to the small business community be written off, which it claims would save the taxpayer around £1bn in interest payments and avoid the need for banks to utilise “costly” debt recovery agencies.
Phil Hall, AAT head of Public Affairs & Public Policy, said: “The Public Accounts Committee report again highlights that most of these loans are likely to be written off.
“As a result, AAT repeats its recommendation that all Bounce Back Loans for small businesses be written off to provide a much-needed boost for the SME sector, enable a speedier recovery, more growth, more investment and to benefit the taxpayer in the long run.”